Question 1

When both firms have dominant strategies

Accepted Answer

A) the outcome is called a dominant strategy solution. 
B) joint profits are maximized. 
C) there are multiple Nash equilibria. 
D) there is a prisoners' dilemma. 
A) the outcome is called a dominant strategy solution. 
B) joint profits are maximized. 
C) there are multiple Nash equilibria. 
D) there is a prisoners' dilemma. A

Question 2

-In the above figure, the Nash product is

Accepted Answer

A) 20. 
B) 40. 
C) 100. 
D) 400. 
A) 20. 
B) 40. 
C) 100. 
D) 400. C

Question 3

If you take a maximin strategy,

Accepted Answer

A) you are irrational according to economic definition. 
B) you are ensuring that the other player gets the worst possible outcome. 
C) you are getting the best possible outcome given that the other player does the thing that's worst for you. 
D) then both players are doing the best they can given the payoffs in the game. 
A) you are irrational according to economic definition. 
B) you are ensuring that the other player gets the worst possible outcome. 
C) you are getting the best possible outcome given that the other player does the thing that's worst for you. 
D) then both players are doing the best they can given the payoffs in the game. C

Question 4

Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?

Accepted Answer

A) the Pareto Criterion 
B) cheap talk 
C) Both A and B 
D) None of the above. 
A) the Pareto Criterion 
B) cheap talk 
C) Both A and B 
D) None of the above.

Question 5

In the above table, if the players use a maximin strategy,

Accepted Answer

A) firm A produces a High Quality product and firm B produces a Low Quality product. 
B) the equilibrium choice is the same as using a regular, best response strategy. 
C) both firms produce a High Quality product. 
D) firm A produces a Low Quality product and firm B produces a High Quality product. 
A) firm A produces a High Quality product and firm B produces a Low Quality product. 
B) the equilibrium choice is the same as using a regular, best response strategy. 
C) both firms produce a High Quality product. 
D) firm A produces a Low Quality product and firm B produces a High Quality product.

Question 6

In game theory, we usually assume that all players

Accepted Answer

A) act rationally. 
B) use the information available to them to decide on a best strategy. 
C) know about the payoffs of the other players. 
D) All of the above. 
A) act rationally. 
B) use the information available to them to decide on a best strategy. 
C) know about the payoffs of the other players. 
D) All of the above.

Question 7

-The above figure shows the payoffs to two airlines, A and B, of serving a particular route. Is there a Nash equilibrium? What is it? Explain.

Accepted Answer

Firm A entering and firm B not entering

Question 8

A strategy is dominant if

Accepted Answer

A) it yields a greater payoff than any other player receives. 
B) it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C) the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D) it is part of a Nash equilibrium. 
A) it yields a greater payoff than any other player receives. 
B) it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C) the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D) it is part of a Nash equilibrium.

Question 9

A game in economics is defined as

Accepted Answer

A) something that is shown on ESPN. 
B) competition in which strategic decision making is integral. 
C) competition in general. 
D) an actual strategy chosen by one or more economic agents. 
A) something that is shown on ESPN. 
B) competition in which strategic decision making is integral. 
C) competition in general. 
D) an actual strategy chosen by one or more economic agents.

Question 10

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, and the government imposes a $20 per firm tax on firms that service this route, which of the following maximizes the firms' joint profits?

Accepted Answer

A) Neither firm services the route. 
B) Firm A offers firm B $20 to not enter. 
C) Both firms will service this route. 
D) Firm B offers firm A $30 to not enter. 
A) Neither firm services the route. 
B) Firm A offers firm B $20 to not enter. 
C) Both firms will service this route. 
D) Firm B offers firm A $30 to not enter.

Question 11

One possible source of inefficiency in bargaining is

Accepted Answer

A) that there are multiple Nash equilibria. 
B) bounded irrationality. 
C) that the Nash product may be indeterminant. 
D) that the bargaining process takes time. 
A) that there are multiple Nash equilibria. 
B) bounded irrationality. 
C) that the Nash product may be indeterminant. 
D) that the bargaining process takes time.

Question 12

In an English auction

Accepted Answer

A) the price decreases until someone bids. 
B) the price increases until nobody else will raise the bid. 
C) bidders put their bids in a sealed envelope. 
D) the winning bidder pays the amount bid by the person with the second highest bid. 
A) the price decreases until someone bids. 
B) the price increases until nobody else will raise the bid. 
C) bidders put their bids in a sealed envelope. 
D) the winning bidder pays the amount bid by the person with the second highest bid.

Question 13

In game theory, a strategy

Accepted Answer

A) is useless, because firms are subject to bounded rationality. 
B) is useful in static games, but not in dynamic games. 
C) defines the specific actions a firm will make. 
D) determines the payoff matrix of the game. 
A) is useless, because firms are subject to bounded rationality. 
B) is useful in static games, but not in dynamic games. 
C) defines the specific actions a firm will make. 
D) determines the payoff matrix of the game.

Question 14

In a sealed-bid, second-price auction, you should bid

Accepted Answer

A) your estimate of what others value the good at. 
B) one dollar more than your estimate of what the second-highest bid will be. 
C) your highest value. 
D) the common value of the good. 
A) your estimate of what others value the good at. 
B) one dollar more than your estimate of what the second-highest bid will be. 
C) your highest value. 
D) the common value of the good.

Question 15

In the following game, how many Nash equilibria are there?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) unable to determine 
A) 0 
B) 1 
C) 2 
D) unable to determine

Question 16

A maximin strategy

Accepted Answer

A) maximizes the minimum payoff. 
B) minimizes the maximum payoff. 
C) maximizes the payoff of one player, but minimizes the payoff of the other. 
D) maximizes the minimum joint profits of the players. 
A) maximizes the minimum payoff. 
B) minimizes the maximum payoff. 
C) maximizes the payoff of one player, but minimizes the payoff of the other. 
D) maximizes the minimum joint profits of the players.

Question 17

A mixed strategy may

Accepted Answer

A) be part of a Nash equilibrium. 
B) be a set of probabilities of selecting each possible action. 
C) lead identical firms to choose different actions. 
D) All of the above. 
A) be part of a Nash equilibrium. 
B) be a set of probabilities of selecting each possible action. 
C) lead identical firms to choose different actions. 
D) All of the above.

Question 18

In a bargaining game, players

Accepted Answer

A) are forced to negotiate, as in a mediation. 
B) voluntarily negotiate. 
C) are engaging in illegal activity. 
D) Both B and C 
A) are forced to negotiate, as in a mediation. 
B) voluntarily negotiate. 
C) are engaging in illegal activity. 
D) Both B and C

Question 19

In a two-player simultaneous game, if player A has a dominant strategy and player B does not, player B will

Accepted Answer

A) employ a mixed strategy. 
B) choose his best strategy assuming that player A plays her dominant strategy. 
C) not achieve a Nash equilibrium. 
D) assume that player A does not choose her dominant strategy. 
A) employ a mixed strategy. 
B) choose his best strategy assuming that player A plays her dominant strategy. 
C) not achieve a Nash equilibrium. 
D) assume that player A does not choose her dominant strategy.

Question 20

Strategic advertising in the cola market

Accepted Answer

A) significantly expands the size of the market. 
B) brings in few new customers and primarily shifts market share among rivals. 
C) shifts market demand to the right, increasing quantity sold and decreasing prices. 
D) has no impact on the market. 
A) significantly expands the size of the market. 
B) brings in few new customers and primarily shifts market share among rivals. 
C) shifts market demand to the right, increasing quantity sold and decreasing prices. 
D) has no impact on the market.

When both firms have dominant strategies

-In the above figure, the Nash product is

If you take a maximin strategy,

Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?

In the above table, if the players use a maximin strategy,

In game theory, we usually assume that all players

-The above figure shows the payoffs to two airlines, A and B, of serving a particular route. Is there a Nash equilibrium? What is it? Explain.

A strategy is dominant if

A game in economics is defined as

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, and the government imposes a $20 per firm tax on firms that service this route, which of the following maximizes the firms' joint profits?

One possible source of inefficiency in bargaining is

In an English auction

In game theory, a strategy

In a sealed-bid, second-price auction, you should bid

In the following game, how many Nash equilibria are there?

A maximin strategy

A mixed strategy may

In a bargaining game, players

In a two-player simultaneous game, if player A has a dominant strategy and player B does not, player B will

Strategic advertising in the cola market

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 12: Game Theory and Business Strategy

When both firms have dominant strategies

-In the above figure, the Nash product is

If you take a maximin strategy,

Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?

In the above table, if the players use a maximin strategy,

In game theory, we usually assume that all players

-The above figure shows the payoffs to two airlines, A and B, of serving a particular route. Is there a Nash equilibrium? What is it? Explain.

A strategy is dominant if

A game in economics is defined as

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, and the government imposes a $20 per firm tax on firms that service this route, which of the following maximizes the firms' joint profits?

One possible source of inefficiency in bargaining is

In an English auction

In game theory, a strategy

In a sealed-bid, second-price auction, you should bid

In the following game, how many Nash equilibria are there?

A maximin strategy

A mixed strategy may

In a bargaining game, players

In a two-player simultaneous game, if player A has a dominant strategy and player B does not, player B will

Strategic advertising in the cola market

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters